The madness of Ed's mansion tax: Experts predict property 'carnage'...and warn values could fall by a third as it's revealed millionaire stars including Johnny Wilkinson and Pete Waterman will NOT have to pay out

Labour's proposed mansion tax would devastate the entire property market, sending values of all homes plummeting by up to 30 per cent, property experts warn.

A plan by leader Ed Miliband and Shadow Chancellor Ed Balls to levy an escalating one per cent tax on homeowners with properties worth more than £2million has been described as 'the politics of envy' and a move which economist believe could have many unintended consequences.

Even surveyors, who would gain huge amounts of extra business in carrying out valuations, dismiss the proposal as 'inherently unfair' and bad for the economy.

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Senior Labour peer Charles Allen has downsized from his £50million home just months before Ed Miliband hopes to introduce his controversial mansion tax

If Mr Allen had stayed in the fashionable Holland Park home in West London, the tax would have cost him £480,000 a year – 1 per cent of the amount by which the property exceeds £2million

Critics fear the tax would unfairly target property-rich, cash-poor, pensioners in parts of London and the South East who bought their property decades ago and have seen them soar in value since.

Estate agent Trevor Abrahmsohn, who has sold more than £1 billion of property in North London over the past 40 years – much of it on the exclusive The Bishops Avenue in Hampstead – predicted 'carnage' across the market if the tax is brought in, bringing back the spectre of negative equity for many.

Former rugby star Jonny Wilkinson, 35, recently put his 19th Century house on the market for £1.3 million, meaning it does not qualify for the tax

'It will start at the top end, but it will inevitably cascade,' he said. 'Once the prices at the top start to adjust, the same thing then happens further down the chain.

'Prices across the entire market will come down between 25 and 33 per cent. It's already starting to happen in the £5 million to £10 million bracket, where prices are falling by about ten per cent, and the market up to £2 million is flat-lining. There is no growth at the moment.

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'When values drop, the Treasury will lose far, far more in reduced stamp duty receipts on property sales than it would gain in revenue from a mansion tax.'

The Mail on Sunday has found glaring disparities across the country. Multi-millionaire music mogul Pete Waterman's 18th Century, seven-bedroom pile in Cheshire, which is worth just over £1 million, would not qualify.

But divorcee Carry Reade has decided not to improve her £1.9 million semi in Wimbledon, South-West London, because she fears it would raise the value and place her in jeopardy.

Economist Ryan Bourne, head of policy at the Institute for Economic Affairs, believes Mrs Reade's reluctance will be echoed by many others, with knock-on effects for the building industry. The only winners might be lawyers, predicted Mr Bourne.

He added: 'People would have to self-declare the value after getting the house surveyed. But the problem is that judgments on value would be open to huge legal dispute as estate agents and surveyors disagree on property values. How would you decide? It would have to go through the courts.'

Much of the criticism aimed at Labour's proposal surrounds the many unanswered questions about the mansion tax. The party believes it could raise £1.3 billion from 100,000 properties. But some 250,000 householders will be forced to pay hundreds of pounds for surveyors to see if their property exceeds the threshold, according to analysts at Knight Frank estate agents. Homeowners could also face fines if the taxman disagrees with the valuation they submit.

The mansion in the Tyne Valley does not qualify for the tax, despite having seven bedrooms, a gym and a swimming pool

A Labour spokesman confirmed that key features – such as how the tax would be assessed, where the graduated tax bands would be drawn and what kind of appeals process would be set up – were all 'further details to be set out'.

James Browne, senior research economist at the Institute of Fiscal Studies, described the plan as 'flawed' and said: 'It might be better to look at reforming council tax itself, rather than a mansion tax which would have a significant impact on a small group.'

Even the Royal Institute of Chartered Surveyors opposes the tax. 'We believe it is inherently unfair, especially to cash-poor, property-rich owners,' said head of policy Jeremy Blackburn. 'It could lead to lost tax revenue, depress the £2 million-plus residential market and reduce the attraction of the UK for investors.

Won't pay: Media tycoon who's moving just in time...and millionaire country house owners

A senior Labour peer has downsized from his £50 million home just months before Ed Miliband hopes to introduce his controversial mansion tax.

Charles Allen, the chairman of Labour's governing board, sold the seven-bedroom detached property in fashionable Holland Park, West London.

Music producer Pete Waterman, who made his £50 million fortune guiding the pop careers of Kylie and Rick Astley, will not be caught by the mansion tax

If he had stayed in the house, the tax would have cost him £480,000 a year – 1 per cent of the amount by which the property exceeds £2 million.

Shadow Chancellor Ed Balls has indicated that there would not be a cap on the maximum amount of mansion tax payable.

Lord Allen, 57, a media veteran who chairs Global Radio, the owner of Capital, Heart and Classic FM, has moved to a smaller property which would attract a much lower tax if Mr Miliband puts the planned measure into effect.

He has also kept a second home in Cape Town, which would not be liable for the charge.

Last night an aide to Lord Allen said the peer had only moved house because he had received a generous, unsolicited offer – and not because he wanted to avoid paying the tax. But the move comes as critics warn the levy could have a depressing effect on premium house sales, and on the Treasury's revenues from stamp duty, as owners of valuable properties 'panic sell' out of a fear of a new Labour Government.

The £50 million price tag for the house, which also boasts six bathrooms and five reception rooms, represents a stunning return on the £11.8 million Lord Allen paid eight years ago.

Lord Allen, who will marry his long-term partner, architect Michael Fisher, later this year, is in charge of the Labour executive body which oversees the party's policy-making process and 'strategic direction'.

The former Granada chairman, ennobled as Lord Allen of Kensington last year, has said he wants to help bridge the gap between big business and Labour and generate greater enthusiasm within the business community.

Last night a spokesman for the peer said: 'Charles and Michael received a very generous offer a few weeks ago from someone who needed to move quickly, so he has bought a smaller property in Chelsea while he works out what to buy next. There is every chance he will move back into an equally large property.'

The spokesman added: 'Charles supports the mansion tax. He thinks it is ridiculous that the wealthy people he mixes with pay the same level of council tax as people who are much less well-off.'

Critics of the tax have argued it will be expensive and confusing to enforce and will disproportionately hit 'asset-rich but cash-poor' homeowners in the capital.

Tory MP Peter Bone said: 'This could easily be interpreted as a piece of tax planning by Lord Allen.

'We will increasingly see owners selling up as the prospect of an Ed Miliband Government looms. This is the same old tax-and-spend Labour Party.

Waterman's 18th Century home near Warrington, Cheshire, may have seven bedrooms but it is valued at just over £1million

'And as with all taxes, once they introduce it, it will be expanded to encompass more people.'

Former England rugby star Jonny Wilkinson, 35, recently put his 19th Century house in the Tyne Valley on the market for £1.3million, meaning it does not qualify for the tax, despite having seven bedrooms, a gym and a swimming pool.

His estimated £14million net worth comes from his career earnings and lucrative advertising deals with Gillette and Adidas.

Now selling up as he takes a coaching job with top French team Toulon, Wilkinson, left, says the gym and pool he built at the house helped save his career when he had to undergo rehab during a long spell of injury between 2004 and 2007.

Music producer Pete Waterman, who made much of his £50 million fortune guiding the pop careers of Kylie and Rick Astley, will not be caught by the mansion tax.

His 18th Century home near Warrington, Cheshire, may have seven bedrooms but it is valued at just over £1 million. Waterman, 67, said: 'Tax isn't the answer.

Why are houses worth £2 million in London? Because the French and others moved there because they were paying too much tax at home.'

Will pay: The old and city dwellers

Broadcaster and Labour peer Joan Bakewell lives in a house in trendy Primrose Hill, North London, which she bought for £12,000 half a century ago, but it is now worth more than £4million.

As a result, she would be landed with a £20,000 a year mansion tax bill.

When the levy was first suggested, she admitted: 'I may have to sell my house. Like many older people I am what is called capital-rich and cash-poor. Many of us have big houses but an income which declines as you get older.'

Labour peer Joan Bakewell lives in a house in Primrose Hill, North London, which she bought for £12,000 half a century ago, but it is now worth more than £4million

Divorced mother-of-three Carry Reade, 51, could be clobbered if she decides to do any work on her five-bedroom house in Wimbledon.

Bought for £1.4million in 2006, it is now worth £1.9 million and she fears any improvements might push the price over the threshold.

Ms Reade said: 'This tax could have an impact on people like me. I have to be very careful with my money, and am in no position to pay more tax.'

Carry Reade, 51, bought her five-bedroom house in Wimbledon for £1.4million in 2006, it is now worth £1.9 million and she fears any improvements might push the price over the threshold

And guess what? Five millionaires in the shadow cabinet won't pay up...

Ed Balls and Yvette Cooper live in a £1.1million house in London's Stoke Newington and a £250,000 property in Ms Cooper's West Yorkshire constituency.

Deputy Labour Leader Harriet Harman owns an imposing property in the South London suburb of Herne Hill. Although worth at least £1.5 million, it would not be liable for the tax.

Ed Balls and Yvette Cooper have homes in Stoke Newington and Ms Cooper's West Yorkshire constituency

The £1.1million house in London's Stoke Newington will not qualify for the mansion tax

Rising star Chuka Umunna, the Shadow Business Secretary, has a £400,000 flat in Streatham, his South London constituency, that he bought in 2007 for £230,000.

Education spokesman Tristram Hunt, lives in a £1 million home in Hornsey, North London, which he bought for £740,000 three years ago.

Deputy Labour leader Harriet Harman's £1.5million house in Herne Hill, London, would not be liable for the tax

Shadow Business Secretary Chuka Umunna has a £400,000 flat in Streatham, South London

Education spokesman Tristram Hunt, lives in a £1million home in Hornsey, North London

SO WILL YOUR JEWELLERY AND FURNITURE BE NEXT?

Unlike the proposed UK mansion tax, which only applies to property, the French wealth tax applies to savings and shares, jewellery, the value of your car, even your furniture and stamp collection.

Among the few items exempted are works of art – something President Francois Hollande wanted to exclude so as to maintain a traditionally artistic country’s legacy.

Socialist France imposes the tax on all assets worth more than €1.3 million – the equivalent of about £1 million.

Those with this amount of wealth have to hand over up to 1.8 per cent of what their global assets are worth to the taxman every year.